Senate Committee Hears Ideas For Expanding Shareholder Rights

Owners Of Stock Seek Aid

Ideas For Expanding Shareholder Rights Detailed At Hearing

WASHINGTON — You own stock in a corporation. You read about poor management, poor earnings and a poor outlook.

Right now, many contend, there's little you can do to change the direction of the company.

"The system no longer works the way it should, if it ever did," said Edwin H. Season III, who testified Thursday on behalf of the United Shareholders Association, a nonprofit group that pushes shareholders' rights.

Sen. Christopher J. Dodd, D-Conn., was the chairman of a Senate securities subcommittee hearing on the issue, but seemed more comfortable throwing the issue back to corporations.

"I certainly do not want to see this committee caught in what would surely be a contentious battle over shareholder rights," he said.

Ultimately, he said, corporations have to fix the problem. "I believe we are all better off," Dodd said, "if boards of directors can show they are responsive to shareholders and are doing their best by them. I urge them to do so." Many senators, though, including Dodd, were concerned about the growing movement for more shareholder rights. Sen. Christopher Bond, R-Mo., cited the "growing outcry" from investors, and Banking Committee Chairman Donald W. Riegle Jr., D-Mich., said "we ought to get the issue under the glass; it's so pronounced." The issue is hardly new, Dodd said. But like other people, he has found that "shareholders believe, frankly, that many boards of directors have not done their job" protecting shareholders.

The Securities and Exchange Commission has been looking into the matter, and has proposed several steps to make it easier for consumers and investors to challenge directors and management.

SEC Chairman Richard C. Breeden illustrated how hard it is to find the right solution.

Sure, consumers should have more say. But at the same time, he said, management must have the time and ability to focus on the fundamentals of the business without constantly worrying about

shareholder complaints.

Nevertheless, several ideas were discussed at the hearing. Among them: